Apple Says Spotify, Pandora and YouTube Are “Building Their Services Off the Backs of Artists”

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Forbes has already declared Apple Music a failure, but maybe Apple is already winning for artists.  That’s because Apple demands a subscription payment after three months, and unlike Spotify has no ad-supported tier.  That guarantees a higher payout per stream, and a better deal for artists.

Other free-only sites like Pandora, SoundCloud, and YouTube, among others, are paying near-zero royalties to artists while amassing users in the tens of millions.  See the problem here?

“Free is a real issue.”

Now, one the largest tech companies in the world is taking a stand.  “Free is a real issue,” said top Apple Music executive Jimmy Iovine at Vanity Fair’s Summit 2015, as covered by the Verge.  “This whole thing about freemium, maybe at one time we needed it.  But now it’s a shell game.”

Technically speaking, all of these services are legal.  But are they ethical?  “These companies are building an audience on the back of the artist,” Iovine continued, while pointing to a deeply-ingrained bias towards free content in the tech sector.  “We always waited for somebody to come out of the woods and do distribution for us,” said Iovine, referring to his earlier tenure as CEO of Universal Music Group division Interscope.

“That doesn’t work because the tech companies will come out and ask you to do it for free.”

But will music fans join the paid revolution?  So far, Apple executives are being super-cagey about Apple Music’s paid subscription level, and that includes Iovine.  Meanwhile, major labels are pushing for less free, and according to rumors, potentially pushing Spotify towards gated, premium-only content tiers.

Image by Brian Harrington Spier, licensed under Creative Commons Attribution-ShareAlike 2.0 Generic (CC BY-SA 2.0).

42 Responses

  1. Jeff Robinson

    Jimmy, you and I have met more than once through Chas Sandford.

    Build better service than these others and I will gladly pay you. Right now, your service is BAD. Do better. Let’s A&R this Apple Music Service, okay? Read the room as you’ve done so many times in the past-

    Feedback is, the Apple music service has so many problems that a major restructuring should be the only end result. Sort of like tearing down a mix and starting over. Wrong direction and wrong vibe.

    The kids hate it.

    Do better.

    Reply
    • Remi Swierczek

      Dear Jeff,
      Your friend Jimmy and his partner in crime Eddy Cue are intoxicated with Ek’s and Westergren’s narcotics. AppleMusic and Beats are just copy cats of Spotify and Pandora Radio. Tell them to jump on YouTube concept or they will miss music stupidity train.
      Those new business models are unfortunate for musicians. Always run or endorsed by corporate monster or loaded with cash Wall Street.

      Again we can have efortleslly $100B music industry by 2020 if we convert all of Radio and streaming to primitive music stores.

      Reply
    • There is something...

      Nope… The reality is that the kids hate to pay. That’s why Youtube, despite having the poorest interface when it comes to music, is so much used by kids to find music. It’s free to use, free to upload to… And where would be Spotify by now without their free tier ? They have the exact same problem than Apple when it comes to converting users to Premium. That why the per stream amount on Spotify is lower and lower every year, because they just can’t convert enough users. And I don’t see Google having much more success with their paid Youtube service. Time will tell…

      Reply
      • Remi Swierczek

        YouTube just converts MUSIC to chips, soda and pizza generated teenage advertising FAT.

        YouTube can not make enough money to pay for electricity and servers.

        Just imagine if someone would enforce on them market value of music and medical bills for “no purpose in life yet” teenage kids! Google would dump this nut house at once.

        Reply
  2. t cooke

    Jimmy speaks. Jimmy does not like to lose. But isn’t apple music gladly a loss leader for apple, so iv read at a less dramtic source. Everyone’ jockn jimmy, jockn jimmy.

    Reply
    • Danwriter

      iTunes was Apple’s loss leader in the iPod era (or at least revenue neutral). Apple Music has no hardware to be the loss leader for. Beats still leads the pack in the consumer headphones category but NPD attributes the sector’s growth to bluetooth and fitness.

      Reply
  3. Ariel

    “Higher payout per stream.” See the problem there?

    “Is it ethical?” That’s rich. The music industry, of course, is known for its ethical treatment both of artists and customers.

    Copies of songs are now essentially free to produce and distribute. Can we please acknowledge that that changes the situation somewhat?

    Reply
    • Name2

      The music industry, of course, is known for its ethical treatment both of artists and customers.

      I know when my moral compass needs calibration, I ask myself, “What would the music industry do?”

      Reply
    • Versus

      “Copies of songs are now essentially free to produce and distribute.”

      True. But the cost of creation of music is not free. Nor is marketing, promotion, PR, management, accounting, video creation, and all else that may go into an attempt at a music career.

      Reply
    • Versus

      ““Is it ethical?” That’s rich. The music industry, of course, is known for its ethical treatment both of artists and customers.”

      A couple points here:
      1. There are ethical people and companies in the music industry. I’ve been fortunate to work with some of them.
      2. Even though there are many unethical in the music industry, that doesn’t justify accepting or perpetuating this as the status quo. Let’s change this.

      Reply
  4. Name2

    Legally, all of these services are legal. But are they ethical?

    Are we talking about streaming or relying on Creative Commins images on a for-profit website?

    Reply
  5. Blahblahblah

    There were executives at major labels, being paid millions, who thought it would be okay that Spotify would offer a free version for an indefinite amount of time. I hope they’re all stocking shelves at Trader Joe’s now.

    Reply
    • Sholomo

      Exactly! Starbucks at least offers health insurance. The reality is those execs were probably promoted.

      Reply
  6. Shlomo

    Apple embracing streaming radio is end of the music industry. Apple has now legitimized the biggest pirate of the world. Has anyone heard of the artists breaking from streaming radio? Yeah me either. Sometimes diversification isn’t good. 1000 places to hear music. 1 billion hobbyists claiming to be artists

    The devaluation of music is a travesty. And there’s always some idiot who says yeah but if 300 million people pay for streaming radio Than we’ll be be a 100 billion dollar industry.

    Morons. I asked 20 friends if they use Spotify or Apple Music. Half didn’t know Spotify and the other half said is Apple Music my iTunes library?

    Good luck converting your 100 billion dollar fantasy.

    Reply
    • DigitalMusic.us

      The reality is what other options does the music industry have? They either embrace streaming where they make pennies on the dollar or they’ll fuel outright piracy?

      I don’t see much of a middle ground.

      Reply
      • Versus

        The alternative, or rather additional action, is to demand real laws with real enforcement against piracy, including doing away with DMCA and its disastrous “safe harbor”.

        Once the black market is eliminated, music pricing at least has a chance to normalize in a fair and legal market.

        Reply
        • DigitalMusic.us

          The thing is.. can the black market ever truly be eliminated?

          Hell, not even in music.. in damn near anything. From credit card numbers, to sex slaves.. If you want it.. there’s always a way to get it.

          Reply
          • RS

            The film industry has done much better job of fighting pirates than the music industry. It’s not perfect, but the studios have enlisted the support of government trade bodies to fight piracy abroad, and have collectively amassed an effective body of lawyers, and instituted effective day-to-day practices . If yo go to a Hollywood film preview you often have to be searched at the door, and they have a guy with an infrared camera surveying the audience for illegal videoing of the screen for instance. A lot of stuff still gets through, but they have adopted the mentality of “we will fight piracy’ rather than “we will give in to piracy” as the music biz has done.

      • superduper

        What other options does the music industry have?

        How about:
        Ending streaming once and for all for long-term, permanent music listening
        Selling fairly priced music that customers would buy
        Selling GOOD music
        Allowing streaming to only be used as promotional tools for selling music

        Trust me, streaming is not the ONLY option that the music industry has.

        Reply
    • Anon

      Exactly.

      Apple embracing streaming means no more money from selling music for anyone except a few pop stars.

      Reply
  7. Anonymous

    Jimmy Iovine is an idiot, and little more than a shill for UMG inside Apple

    Reply
  8. lroosemusic

    That’s rich coming from the company that built the flagship device to store all your pirated music.

    Reply
      • so

        And it should be remembered that iTunes Match is essentially doing the same thing as Spotify’s free version if the music is stolen, and the vast majority is. And both Spotify free and iTunes Match pay a very similar rate.

        Reply
  9. Casey

    Love the bashing of Pandora. Especially considering Apple offfers a similar radio service with more features. For free.

    Reply
  10. Anonymous

    ALL of these music industry guys – from the Top … Down – are clueless and hacks (no pun intended)

    Reply
  11. ANTPOODLE

    One small problem; the pricing structure for Apple, Spotify, Rhapsody and Google Play ARE like the Apple I tunes store fixed and therefor illegal according to US Market Economy Guidelines. The basis of our whole economic system is market competition; You know like the LENDING TREE AD “When banks compete YOU WIN”

    Well NO ONE is competing in the music business. The prices are all rigged; and having NOTHING to do with supply and demand and market forces. Read up on the Sherman Anti Trust Act. We have the late great Steve Jobs to thank for this; He was the one that said ALL MP3 FILES ARE 99 CENTS. Meaning all mp3 files are illegally priced. Fixed pricing is illegal pricing. No other industry has the lack of choices in the market place as the music industry. NO ONE.

    Reply
    • Mac

      Doesn’t the whole supply and demand thing go out the window with digital distribution? Your supply becomes essentially infinite, since you can never run out of downloads, and your distribution costs aside from marketing essentially become zero.

      Reply
  12. Anonymous

    Apple=The pot calling the kettle black. Lets not forget the history. Free music was good when Apple was a failing company, it saved Apple. With iPod’s launch back in 2001, the sales were meteoric, all courtesy of the superabundance of “free” pirated music. iTunes back then was only a MP3 cataloging program, not a store, that allowed all the iPod owners with Mac’s to cleanly label all their ill-gotten gains. There were even “third-party” ( wink, wink ) plugin apps for iTunes that interfaced with Napster, so you could download from Napster straight into iTunes. Having gained market dominance Apple then sought to seal off that route to rival competing MP3 players and gain an air of legitimacy by launching the iTunes store, pricing tracks as low as they could get the record companies to agree, enforcing the unbundling of the album, 1 track cost $0.99, 10 tracks cost $9.90 etc., & creating a closed “Apple” environment.

    Reply
  13. Maccer

    I would have stayed with apple but the interface is so confusing and i hate how its wrapped up with my persaml library. If apple had created a separate music app and made it more intuitive than spotify they would have a winner but its crap for now

    Reply
  14. Ellen Shipley

    Having been a recording artist, hit songwriter, producer in the Music Biz World for 30 years, hopefully allows me to state with all humility—I’ve been there,, I know the players..I know our friends and I know our enemies and the sad fact is—We are losing our profession
    Humbly, let me state I know a lot of shit—particularly about the true nature of the record label executives; the Publishers; the Google monster; Apple; Pandora; YouTube–(son of Evil Google Monster)—and so on.

    The essential issue is: Songwriters are the foundation of music–supplying the world with a song to sing.
    But we are treated as if we should give the world all its songs–all its music–for free without any regard for the fact that this gift we have, is also our job to earn a living…

    FACT of law is: SONGWRITERS ARE SUPPOSED TO BE PAID FIRST__FIRST__FIRST–when royalties begin to come in from everyone everywhere1

    FACT: SONGWRITERS are PAID– LAST LAST—–after all the labels and publishers and PRO’s and GOOGLE and YOUTUBE and all the executives and ALL THE unknown agencies we pay without any knowledge of what they do–TAKE THEIR SHARE FIRST OFF THE TOP——–Yup—

    We have never and do not still ever know what we are really owed in terms of our royalties–by the time a song begins to gather royalties—EVERYONE ELSE TAKES THEIR SHARE FIRST IMMEDIATELY—-THEN
    IT TAKES A YEAR TO TWO YEARS FOR A SONGWRITER TO GET WHATS LEFT OVER!!!

    THe streaming music companies like Spotify and Pandora made deals with the record labels to own shares in those streaming companies and therefore are a songwriter’s enemy. The Publishers take money first from the gross amount earned and THEN a YEAR OR TWO LATER pay on the NET leftover to the songwriter.

    I can say from experience, I have worked with Jimmy over the years and was treated fairly and paid correctly. But I do not trust anyone involved with streaming companies as to how they pay songwriters and their advocacy for justice for us is bogus.
    Same with the latest Record label who paid me $325.00 for a major release of my single (and on the albums) with a major artist in the UK on two compilation records that contained 20 plus other songs I have written over the years contained on these releases.

    I was the songwriter who “OUTED” PANDORA as to what the thieves were really paying songwriters per stream, by disclosing all my BMI information showing what I was paid,on a hit single of mine.
    THE GUARDIAN newspaper broke the article and then the numbers of what Pandora was truly paying the songwriters–went viral all over the world–
    I received $38.41 from Pandora for three and a half million streams in a three month period on one of my songs.

    So, songwriters are merely the lowest denominator on the food chain–no one gives a shit whether anything is ethical or legal or outrageously unfair—

    AS LONG AS SONGWRITERS ARE TREATED WITH DISRESPECT AND WITH NO HONOR FOR WHAT THEY CONTRIBUTE___we will be a source of money forever for the INDUSTRY (supposedly our ‘family’) and the crooks in the streaming companies–
    I don’t care if its Apple or Pandora or Spotify or my publisher or the labels that owe me money —THEY ALL ARE IN THIS FOR THEIR OWN PROFIT AND POWER FIRST AND FOREMOST!
    We have few advocates and few friends.

    If Jimmy was on our side? There would be NO streaming companies at all—
    The labels would get sued for not paying us; my PUblishers would be audited at THEIR EXPENSE not mine so I can get my royalties; Marty Bandier would stop trying to own all the licensing on our songs while pretending it is in our own interests;
    The US government would honor the Constitution and protect songwriters rights to earn a living from what they do

    This is long and I apologize.. My point is :
    THERE ARE NO SEPARATE ISSUES HERE

    It all began in the fifties with the labels cheating the Black Artists of their royalties

    It all began with the fact that the SONGWRITERS are NOT ALLOWED TO HAVE A UNION!

    It all began when the MUSIC INDUSTRY as a whole, began to cheat the songwriter.

    and sadly, the statistics are:
    there are only 5% active songwriters earning a living from their profession
    We have LOST 95% of our artistic community BECAUSE NO ONE GIVES A SHIT ABOUT ANYTHING BUT THEIR OWN POCKETS

    I represent many songwriters as we gather more information and sadly realize, no new songs will soon ever be written again……

    NOW

    Lets look at the truth

    Name the people who have power to help us and do nothing

    Name the people with all the power and hurt us

    Thanks!

    Reply
    • Sarah

      Ellen, you should come talk to us at RepX. We’re taking a totally different approach to music, that’s all about transparency, putting you in control of your work, and maximizing your revenues…. and we’re taking extra steps to set things right for songwriters.

      We are still in our early days (we once thought we’d be launched to consumers by now, but these things move slowly). Currently we’re picking up traction with labels and publishers, but we love talking directly to artists (that includes songwriters!!) to make sure their interests are fully represented.

      Come talk to us, please. Find out what we’re doing, tell us what you think and how we can make sure our platform, AV, works well for you – and, of course, participate if you feel AV will be good for you. 🙂

      Reply
    • Ellen?

      Humbly, let me state that you apparently don’t know shit about the very fundamentals of how this works.

      You DID NOT out Pandora as to what they were really paying songwriters per stream.

      See, Pandora doesn’t pay songwriters. All you did was “out” how badly your PRO fucks you.

      You DID NOT receive $38.41 from Pandora for three and a half million streams in a three month period.

      Pandora doesn’t pay you. They pay your PRO – and THEN, it’s YOUR PRO that fucks you.

      Figure it out.

      Oh, and you should probably also realize that Pandora didn’t make any deals with the record labels for the labels to own shares in their streaming company. That was Spotify.

      Reply
  15. superduper

    I’d say the same about Apple. Streaming is bad even when it is paid because the basic economics of streaming even when paid for are fundamentally wrong. Just remember, the only major difference between streaming and downloading is payment and ownership.

    Reply
  16. superduper

    I’d say the same about Apple. Streaming is bad even when it is paid because the basic economics of streaming are fundamentally wrong. Just remember, the only major difference between streaming and downloading is payment and ownership.

    Reply
  17. David Stinnett

    Apple takes 30% gross revenue off Spotify and others on Apple platform, and they make these comments….Need I say more? WOW

    Reply

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